US based Hospira Inc said on Tuesday that it would buy Orchid Chemicals & Pharmaceuticals Ltd's generic injectable drug business for $400 million in a deal that will expand its global reach and position as the market leader.

The deal includes acquisition of Orchid's antibiotics manufacturing complex and pharmaceutical research and development facility in Chennai, India, as well as its generic injectable product portfolio and pipeline, Hospira said.

The companies also signed a long-term exclusive agreement for Orchid to supply active pharmaceutical ingredients for the business Hospira is acquiring.

Hospira expects the transaction, which the boards of both companies have unanimously approved, to be neutral to its 2010 earnings per share, excluding the impact of transaction-related expenses.

Hospira, which is based in suburban Chicago, owns about 23 percent of the roughly $11 billion global generic injectables market -- more than twice the share of its closest rivals.

In a September interview with Reuters, Hospira Chief Executive Officer Chris Begley said the company was eyeing small deals that would expand the generic injectables business and its geographic footprint. Tuesday's announcement, which gives Hospira a presence in India and a platform for future growth there, helps achieve both goals.

"This acquisition aligns perfectly with Hospira's strategy to improve our margins and cash flow, by lowering our cost position for a key product line, and to invest for growth, by expanding our presence globally and reinforcing our leadership position in generic injectables," Hospira Chief Operating Officer Terry Kearney said in a statement.

Hospira shares were up 76 cents, or 1.6 percent, at $49.73 in midday trading on the New York